Article excerpt

And recent steps by several Asian nations to cut subsidies for
oil consumption should reduce global petroleum demand.

No guarantees, but such actions may ease the price pressures that
pushed oil to a record $139 a barrel earlier this month. Energy
costs have become a driving force of inflation besetting US and
global consumers.

Policymakers don't have a magic wand to wave. The long-term
challenge will remain: Demand for energy keeps rising even as it
grows harder to boost oil production.

But energy experts cite a range of tactics that could provide
some relief. Even efforts that don't bring a rapid change in supply
or demand might have an immediate effect on market psychology.

Among the options:

* Nudge consumers toward conservation.

* Encourage more oil production.

* Ramp up investment in alternative energy sources.

* Discourage speculative investing in oil markets.

* Phase out subsidies for oil consumption.

"There's a lot of low-hanging fruit out there," involving
boosting supplies or curbing demand, says John Kilduff, energy
analyst at MF Global in New York. "Longer-term plans might get
rewarded here in the marketplace today."

Much of this past year's run-up in oil has to do with prospects
for supply and demand looking years into the future, he explains.
It's hard to sort out how much of that can be classified as a
speculative "bubble" and how much is a rational sobering of the
outlook for supply and demand.

But in either case, many analysts say that policy changes can
have an impact on current market behavior.

The oil issue topped the list of concerns as finance ministers
for the Group of Eight industrialized nations met in Osaka, Japan.

"Elevated commodity prices, especially of oil and food, pose a
serious challenge to stable growth worldwide," they said in a joint
statement Saturday. This also creates particular challenges for the
world's "most vulnerable" people, they said, and for global
inflation rates.

In the US, consumer prices surged 0.6 percent in May alone,
according to a government report Friday. Oil accounted for most of
the surge.

Crude oil prices have doubled in the past year, with most of that
rise occurring in the past five months.

Oil prices closed at about $135 per barrel Friday, down a bit
because of news reports that Saudi Arabia was planning to expand
production. United Nations Secretary General Ban Ki-moon detailed
those plans on Sunday after meeting with Saudi leaders. He said
Saudi Arabia will raise output by 200,000 barrels per day, or about
2 percent.

That would be a welcome move in a world where supply and demand
appear increasingly to be on a fine edge.